{"id":110558,"date":"2023-04-27t11:57:22","date_gmt":"2023-04-27t15:57:22","guid":{"rendered":"\/\/www.g005e.com\/?p=110558"},"modified":"2024-08-27t17:02:34","modified_gmt":"2024-08-27t21:02:34","slug":"why-buying-into-a-firm-is-such-a-great-investment","status":"publish","type":"post","link":"\/\/www.g005e.com\/2023\/04\/27\/why-buying-into-a-firm-is-such-a-great-investment\/","title":{"rendered":"why buying into a firm is such a great investment"},"content":{"rendered":"
<\/a>caution: don\u2019t get hung up on ownership percentage.<\/strong><\/p>\n by marc rosenberg<\/i> accepting a partnership invitation offers two terrific, lifetime benefits to new partners that for most people cannot possibly be matched in any other career pursuit.<\/p>\n more: <\/b>four philosophies for managing a cpa firm<\/a> | how partner and staff actions impact profits<\/a> | nuts and bolts of mentoring staff<\/a> | nine ways to measure staff performance on the path to partner<\/a> | sixteen duties of a partner<\/a> if they don\u2019t see this and agree with it, then perhaps it would be unwise for them to accept the partnership offer. the best investment new partners will ever make<\/strong><\/p>\n new partners make two major investments. the first is the initial buy-in at the outset of becoming a partner. the second is made over many years, sharing in the payment of buyouts of partners who retire or otherwise leave the firm. the burden of the latter is greatly lessened because it is shared with other partners in the firm.<\/p>\n the return on investment for new partner obligations is a whopping 23 percent. here are the assumptions behind this calculation:<\/p>\n in addition, there\u2019s the appreciation of the initial capital investment and its return to partners upon their retirement. a $150,000 buy-in will appreciate to $364,000 in 30 years, assuming an annual increase of 3 percent.<\/p>\n all in all, the financial benefits of being a partner in a cpa firm are quite substantial. the money a new partner invests will probably be the best investment that person ever makes.<\/p>\n create written criteria for making partner<\/strong><\/p>\n before shooting from the hip and elevating managers to partner because you somehow feel they are \u201cready\u201d or have \u201cearned it,\u201d think this through. firms should first<\/strong> decide what experience, skills and achievements they want from a prospective partner before<\/strong> making the partnership offer. firms should be consistent in applying this process. then<\/strong> the firm should evaluate partner candidates against these criteria.<\/p>\n here\u2019s another important reason to create written<\/strong> partner admission criteria: it\u2019s a critical part of the mentoring process. when partners talk to staff about their future with the firm and what it means to be a partner, it makes sense to share with them these written criteria.<\/p>\n consider the non-equity partner role first<\/em><\/strong><\/p>\n for many years, local cpa firms have commonly promoted managers directly to equity partner for one or both of these reasons: (1) they intuitively felt that the manager earned the promotion or deserved it because of his or her excellent technical performance, loyalty as staff and years of service (time in grade) and (2) they made the promotion as a staff retention tactic, fearing that if they didn\u2019t, the employee would leave the firm, and that would give the partners heartburn.<\/p>\n there is a trend well under way among cpa firms to raise the bar for becoming an equity partner. one reason for this is the increased use of the non-equity partner position.<\/p>\n two common ways the non-equity partner position is used are:<\/p>\n avoid overemphasizing ownership percentage<\/strong><\/p>\n the term \u201cownership percentage\u201d has wrought havoc in cpa firm ownership structures for decades. throughout my 20 years of cpa firm consulting, i have frequently asked partners to explain how their present ownership percentage was arrived at. invariably, i\u2019m greeted by blank stares. they don\u2019t have a clue.<\/p>\n most cpa firms seem to feel it is intuitive to use ownership percentage to decide important financial and governance issues. why is this? firms reason, \u201cif our clients do it, why shouldn\u2019t we?\u201d here are some reasons why they shouldn\u2019t.<\/p>\n many companies derive a major portion of their growth, profitability, overall success and value from branded products, plant, equipment, proprietary processes, patented technology and the goodwill\/market recognition that comes from these assets. it\u2019s understandable that an executive\u2019s ownership percentage in these businesses should impact financial and governance issues.<\/p>\n but cpa firms are different. their primary asset is the partners\u2019 ability to bring in and retain annuity clients, every day in every year<\/em>, to perform a highly technical service from scratch, every day in every year<\/em> and thereby earn clients\u2019 trust and respect, every day in every year.<\/em> the growth, profits and success of a cpa firm occur because of the quality of the owners\u2019 work effort and skills to create these benefits every day in every year. <\/em>cpa firms need to reinvent themselves every day in every year<\/em> to remain successful.<\/p>\n relying too heavily on ownership percentage and not performance is a power grab and\/or an opportunity to avoid accountability. it\u2019s so much easier to take 30 percent of the firm\u2019s profits because one is a 30 percent owner instead of earning<\/strong> it. it\u2019s so much easier to commit transgressions of firm policies (take excessive time off, be delinquent in billing and collections, give oneself a waiver on business or staff development) safe in the knowledge that one can never be held accountable for those shortcomings because of the protection of a lofty ownership percentage.<\/p>\n one of the strongest arguments to minimize the importance of ownership percentage in cpa firms is simple: fairness. it\u2019s simply not fair to rely on the use of ownership percentage to decide critical financial and governance matters. heavy emphasis on ownership percentage is guaranteed to cause tremendous acrimony among current and future partners. firms get twisted up in the illogic and unfairness of using ownership percentage and find themselves trying to solve problems that are unsolvable with old-school methods. they need to employ outside-the-box thinking.<\/p>\n here is a simple illustration. contrast the performance of the following two partners:<\/p>\n
\nhow to bring in new partners<\/i><\/a><\/p>\n
\nexclusively for pro members. <\/span><\/strong>log in here<\/a> or 2022世界杯足球排名 today<\/a>.<\/span><\/p><\/blockquote>\n
\n<\/p>\n\n
\n
\n
\n